Economic Survey 2015 Highlights


Highlights of Economic Survey 2015


* Evidence shows India recovering, but not yet surging
* Upside risk to inflation from monsoon, crude price
* Inflation showed declining trend during April-December
* Inflation not seen up significantly from current level
* Monetary framework to show commitment to low inflation
* Inflation likely to remain in 5.0-5.5% range
* Jan Dhan plan, Aadhaar to help target subsidies
* Outlook for macro economy generally optimistic
* FY15 price subsidy pegged at 4.24% of GDP
* GDP growth points to industrial recovery
* GST, direct benefit transfer to be game changers
* Recommend retail FDI reform to better farm supply chain
* India must adhere to medium term fiscal gap target of 3%
* GST, direct benefit transfers to be game changers
* Labour, capital, land market distortions limit economic growth
* FY15 GDP growth largely driven by domestic demand
* Fall in crude prices has compressed import bill
* Budget aim of gross tax revenue growth over estimated
* Economy appears to have gone past slowdown
* Double digit economic growth trajectory now a possibility
* Growth to get boost from likely monetary policy easing
* Muted export growth source of concern
* Private investment must be engine of long-term growth
* India in a sweet spot for big bang reforms now
* Subsidy doesn’t seem best weapon to fight poverty
* May have to cut some spending FY15 to meet fiscal gap aim
* Need to cut expenditure if revenue not picking up
* Macro-economic fundamentals have dramatically improved
* Falling inflation likely to persist going forward


* Govt remains committed to fiscal consolidation
* Need medium to long-term fiscal policy framework
* Govt borrow should fund invest, not for current spend
* Fiscal consolidation quality key to make it sustainable
* Urge govt to aim to bring dn fiscal gap to 3.0% of GDP
* Higher tax share to states won’t impact fiscal discipline
* Must start expenditure control process to cut fiscal gap
* India forex reserves 2nd largest among economies with CAD


* Divest mop-up so far Rs 240 billion this FY
* Coal price reform must factor in impact on power price
* Banking hobbled by policy that impedes competition
* Potential for further gains from coal pricing reforms
* Public invest in railways to be key to growth revival
* High rail freight rates hinder industry competitiveness
* Private investment must remain primary engine of longrun growth
* Railway freight rates among the highest in the world


* Scope for big-bang reforms now
* Link post office with Aadhaar-based benefit transfers
* Potential for large gains from coal pricing reforms


* Need national common market for farm goods
* Need law amendment for trading in some agri commodities
* Market distortion key problem in farm growth
* FCI rejig panel report ideas useful for food policy
* Rs 107.82 billion food subsidy given as of January 9, up 20%
* Agricultural strategy must focus on raising yield, productivity
* Food grain output 2014-15 seen 257.07 million tonnes
* All states urged to drop fruits, vegetables from APMC
* Structural shifts in inflationary process underway
* Favour constitutional clause for common farm goods market
* Asked states for policy help to farm markets in private sector


* Must remove market access barriers to boost services sector
* Must boost capital market, bond financing going forward
* Capital, labour, land market distortions hurting manufacturing
* SLR need, priority lending creating fincl repression
* Commercial banks saw increase in gross NPAs
* Foreign portfolio flows have stabilised the rupee
* Trade performance signals good time to scrap gold curbs
* Must create extra fiscal space to ensure economic stability
* Undertaken major reform steps for banks, insurance
* India ranks well above the mean for BBB invest grade
* See some stress on asset quality of commercial banks
* Rising non-oil, non-gold imports source of concern
* Liquidity conditions remained broadly balanced
* Low inflation makes space for easing monetary condition
* Ensure borrow over the cycle only for capital formation
* Steps taken by RBI played key role in liquidity management
* Need to conclude monetary policy framework agreement
* Oil prices expected to stay benign in coming months


* Also need to rationalise subsidies to free resources
* Need to target beneficiaries better to free resources
* Ending, phasing out subsidy not feasible, nor desirable
* Subsidy on power can only benefit relatively rich
* Current study shows rich benefiting more from subsidy
* Price subsidy often regressive
* Subsidy reform to rationalise expenditure
* Subsidies via direct benefit transfers laudable goal
* Rationalisation of food subsidies needs more effort


* India ranks among most attractive invest destinations
* Invest activity seems grounded on stronger footing
* PPP model should be revitalised
* Favour greater public invest in railways
* Investment stuck in stalled projects at about 7% of GDP
* Public invest can revive growth engine in short run
* PSUs, especially railways, must lead public investment
* Expenditure switch from consumption to invest to be key


* FY15 weak import largely on sharp fall in crude prices
* FY15 saw hardly any external support to growth
* FY15 growth largely domestic demand driven
* FY15 fiscal deficit of 4.1% of GDP will be met
* FY15 CAD estimated at 1.3% of GDP
* States showed fall in share of mfg in their GDP FY15
* April-December major subsidies up 12.5% on year
* Services sector clocked double-digit growth in FY15
* Equity markets continued to do well in FY15
* FY15 price subsidy pegged at 4.24% of GDP


* 8.5% GDP growth in FY16 in realm of possibility
* 8% economic growth on assumption of favourable monsoon
* FY16 econ growth seen 8.1-8.5%
* External sector outlook most favourable since 2008
* Liquidity conditions seen comfortable in FY16
* Economy to over perform on inflation, make way for rate cut
* FY16 GDP deflator seen 2.8-3.0%
* Outlook for domestic macro economic parameters optimistic
* CAD seen less than 1.0% of GDP in FY16
* Outlook favourable for CAD, its financing
* Inflation to be 0.5-1.0% lower than RBI’s target
* FY16 CPI inflation to be in 5.0-5.5% range


* Enhanced revenue generation remains govt priority
* Must scrap some norm to realise potential of services sector
* Stalling of projects seems to have plateaued
* Enhanced revenue generation is a priority going forward
* Skill development, employment major challenges
* Hyper-growth in tech start-ups, service sector
* Can balance higher public invest with fiscal discipline
* Rural penetration of IT services to drive ‘Make in India’
* India is at threshold of an urban flare-up
* Will soon scale up renewable energy capacity to 170 GW
* Insurance penetration up to 3.9% 2013 from 2.3% in 2000
* Portfolio flows pressurising long-term interest rates


Source – Zee Media